(Editor's Note: This story has been altered. Amy Borrus is the deputy director of the Council of Institutional Investors. Her last name was misspelled in the original version of this story.)

When Fabian Månsson was recruited in 2002 to resurrect Eddie Bauer, the one-time European fashion whiz kid promised to return the clothing retailer to its outdoor roots and fix the struggling company.

Four years later, after a series of miscues, Månsson is likely to walk away with a $10 million golden parachute while leaving behind a failed business that has lost $275 million this year and is worth just one-third of its value compared with more than a year ago.

A company analyst and those who monitor corporate governance of major companies said Thursday that the expected payout for Månsson -- despite his poor performance -- has become all too common in American business.

Critics also say Eddie Bauer Holdings Inc. is being sold at a deep discount to two private equity firms, and some analysts have questioned whether the stock price was manipulated downward to fuel the sale. Månsson has denied those claims.

	Månsson

"This deal stinks to high heaven in so many ways," said Grange Johnson, a retail analyst with New York-based LaGrange Capital. "It's not surprising that management is getting a fat payment after allowing these two private equity firms to steal the company."

An Eddie Bauer spokeswoman said Thursday that Månsson was not available for comment. The buyout companies are Sun Capital Partners Inc. of Boca Raton, Fla., and San Francisco-based Golden Gate Capital. Sun Capital did not return calls, and Golden Gate had no comment.

The multimillion-dollar financial payout and severance benefits for Månsson and other Eddie Bauer executives were detailed in a Securities and Exchange Commission proxy, which the company said this week was mailed to shareholders. For the payouts to occur, investors must approve the sale Jan. 25.

Eddie Bauer's largest stockholders, Boston's Wellington Management Co. and Fidelity Management & Research Co., said Thursday they had no comment. Wellington owns 14 percent of Eddie Bauer, while FMR owns just more than 11 percent.

Shareholders have seen their stock lose 66 percent in value since June 21, 2005, when the company's shares traded at $27.50. The company is being sold at $9.25 a share, or $286 million in cash.

Dan Pedrotty, director in the office of investments for the AFL-CIO, called the severance package for Månsson "pay for failure."

"It's giving this guy a large package just because he showed up," said Pedrotty, whose union monitors the pay of top CEOs. "At the end of the day, it's the institutional investors' money that is being given away."

Beth Young, a senior research associate for the Corporate Library, a watchdog group, said the expected financial windfall for Månsson, 42, and other Eddie Bauer executives is lamentable but common.

Young said executives typically agree to contracts that include large severance payments in order to protect themselves in the event of a buyout. But, she said, there typically is a wide disconnect compared with what they are earning.

Månsson, for example, has a $980,000 annual salary, according to the company. His payout and severance package would be 10 times that figure.

Amy Borrus, deputy director of the Council of Institutional Investors, said that while the package for Månsson seems high, it's a fraction of what former Pfizer Inc. CEO Henry "Hank" McKinnell and Hewlett-Packard Co.'s ex-CEO Carly Fiorina received when they were ousted.

McKinnell, who lost his job earlier this year, could make a potential $200 million, while Fiorina, who was fired last year from HP, left with a $21 million severance package.

"On the face of it, $10 million (for Månsson) is not outrageous compared to what some failed CEOs get. But it does raise eyebrows when the stock price is one-third of what it was a year ago," Borrus said.

Wendi Kopsick, an Eddie Bauer spokeswoman, said the severance package was part of a three-year employment contract Månsson signed Dec. 14, 2005.

Before joining Eddie Bauer in July 2002, Månsson was chief executive of Hennes & Mauritz, one of Europe's largest retailers. During his tenure, the company was known for delivering fashionable clothes at low cost and consistently beating earnings expectations.

However, Månsson abruptly resigned from H&M in March 2000, when the company announced a surprise fall in earnings. He then went to work for Spray Ventures, a European Internet company. Månsson left as a director of Spray in September 2001 when that company ran into financial trouble, according to a Swedish media report.

When Eddie Bauer's former parent, Spiegel Group, recruited Månsson, Eddie Bauer was floundering. But Spiegel executives hoped Månsson could provide the same kind of magic he brought to H&M.

The following year, Spiegel filed for bankruptcy protection and Eddie Bauer became a stand-alone company in 2005. Still, Eddie Bauer struggled, blaming financial losses on poor consumer response to merchandise changes.

The company said fashions were too skewed to younger customers and, ironically, too far away from its "outdoor heritage." The retailer also said it had raised prices too aggressively.

FABIAN MÅNSSON

Age: 42

Years at Eddie Bauer: 2002-present

Previous employment: CEO of European clothing retailer Hennes & Mauritz; director of Spray Ventures, a European Internet company

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